Commentary: VW May Pay Dearly for Its Detour into Luxury As the carmaker rolls out pricey new models

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Commentary VW May Pay Dearly for Its Detour
into Luxury As the carmaker rolls out pricey new
models, it's neglecting the mid-market By
Christine Tierney, BusinessWeek online

• Barrett Achartz
• Maya Naik

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Relevance

• VW is experimenting with innovation to achieve
  competitive advantage in a new niche
• VW hopes to raise its benchmark and improve on
  product image/brand via the halo effect
• Poor positioning strategy against Mercedes and BMW

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VW Phaeton
62,000
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Bentley Continental GT 
150,000
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The Twist

• While the dream-car models are not expected to
  earn much money, VW claims it will cast a halo of
  luxury over other VW models. Does this strategy
  meet the customers needs?

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Problems and Threats

• Competitors Mercedes-Benz, BMW models
• Buyers Cited as not exactly a people's car."
• Achieving Superior Efficiency History of
  engineering excellence
• Achieving Superior Quality Trying to capture
  the elegance of the brand's racing heritage.
• Achieving Superior Customer Responsiveness
  Negative affect on brand imaging, who wants to
  pay 60k for a VW?

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Back to the Twist

• Does this strategy meet the customers needs?
• Customers Compact Interest
• Question of Customization
• Customer Focus

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General Lessons

• Opportunity for learning through failure in
  product development and innovation
• Product development and innovation are key
  factors to achieving a competitive advantage, but
  only if can differentiate
• Marketing Research is crucial

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IRMe

• Timex Importance of innovation and
  technology, entering new niche
• Honda Incremental innovation
• BMG Integration into a new market